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    Wednesday, May 31, 2023

    All You Need to Know About Micro Pension Plan

    The Micro Pension Plan refers to an arrangement for the provision of pension to the self-employed and persons operating in the informal sector.

    The Micro Pension Plan is also aimed at low-income earners, who are often financially illiterate and usually have limited or no access to financial services. It is also the sought-after solution to old age poverty as can be found in jurisdictions such as India, Kenya and Ghana that have successfully implemented a Micro Pension Plan.

    Furthermore, the Micro Pension Plan is to ensure that self-employed persons and employees working in organizations with less than 3 employees are able to have a pension plan under the Contributory Pension Scheme. These category of persons are not mandatorily covered by the Pension Reform Act, therefore they are allowed to participate voluntarily.

    How To Registration

    Prospective Micro Pension Plan participants may register with any Pension Fund Administrator (PFA) of their choice. The minimum age of a prospective participants under the Micro Pension Plan is 18 years.

    How To Contributes

    Contributions could be made daily, weekly or monthly. Operators have designed ways through which participants can contribute easily.

    How To Withdraw If It Need

    Every of your contribution shall be split into two portions. 40% always available for contingent withdrawal, which mean, you CAN withdraw it anytime you want while 60% retained and managed exclusively for pension, i.e you CAN NOT access the fund until you are 50 years old.


    • Over time, old age poverty will decrease with the introduction of the Micro Pension Plan because the informal sector worker would have saved for retirement while active.
    • The additional savings from Micro Pension Plan would aid economic development and macro-economic stability through investment in infrastructure and financial markets.
    • Enhance pension coverage and improve Gross Domestic Product (GDP).
    • Contributions will pass to the next of kin in case of contributor’s death.


    Despite the benefits of the plan, there are a few envisaged challenges that may hinder the smooth implementation of the Micro Pension Plan in Nigeria. The challenges are as follows:

    • Financial Illiteracy: Some of the low-income earners, who constitute the third segment of the informal sector are mostly illiterate and thus, inexperienced with formal financial transactions and institutions.
    • Low incomes: Unlike the high-income earners that can deposit in lump sum, most low-income earners are daily wage workers and as such are unable to deposit large amounts.

    The Commission expects that the implementation of the Micro Pension Plan will yield positive results for Nigerians and the Nigerian Pension Industry. There is however need to create more awareness about the plan.

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